The Securities and Exchange Commission (SEC) has granted NG Clearing Limited approval-in-principle to launch clearing and settlement of Exchange traded derivative products, as Nigerian financial markets’ Central Counterparty Clearing House (CCP).
Its role as a CCP in the financial ecosystem is to ensure safety of the market by managing counterparty credit risk, which in turn, reduces systemic risk in the capital market, by guaranteeing settlement of trades.
NG Clearing was promoted by the Nigerian Stock Exchange (NSE) and Central Securities Clearing System (CSCS) Plc along with key stakeholders, including Nigeria Sovereign Investment Authority (NSIA), Access Bank Plc, Consonance Kuramo Special Opportunities I, Coronation Merchant Bank Limited, Greenwich Trust Limited, Union Bank of Nigeria (UBN) Plc, United Bank for Africa (UBA) Plc and Association of Securities Dealing Houses in Nigeria (ASHON).
Chairman, NG Clearing Limited, Mr. Oscar Onyema, said the company’s main role was to improve the safety of Nigerian financial market by delivering best-in-class post-trade services that manage counterparty credit risk and reduce systemic risk.
He explained that in order to mitigate these credit risks in an efficient and robust manner, the company will interpose itself as a guarantor to both parties in a transaction, thus ensuring the successful execution of derivatives and other trades from various trade points in Nigeria.
“We intend to deliver an unparalleled CCP experience for the Nigerian financial market,” Onyema said.
He added that the company will optimize deployment of its resources to achieve long-term value creation for its stakeholders using a state-of-the-art risk management framework, which complies with global best practices for mitigating settlement risk.
According to him, NG Clearing’s risk-based additional collateral requirement will ensure that capital deployed by clearing members is always optimal while the company intends to deploy a competitive low-cost clearing fee regime for members.
Managing Director, NG Clearing Limited, Mr. Tapas Das sad the company has sufficient financial resources, including settlement guarantee fund, to cover participants’ risk exposures.
He said members will have access to a wide range of financial reports that equip them with extensive knowledge and enable them make informed decisions.
“NG Clearing shall be playing a key role in the financial market ecosystem in the region, upholding stability and safety of the marketplace, through efficient and timely settlement of derivative trades. The aim is to strengthen the country’s investment environment through solutions that systematically reduce risks, enhance operating efficiency, and minimize costs for all market participants, thereby serving as a catalyst to national development,” Das said.
